Monthly Archives: August 2015

Chateau Haut-Brion said it was likely to begin its Bordeaux 2015 harvest for Sauvignon Blanc and Sauvignon Gris at the end of next week, but a final decision was yet to be taken. A summer heatwave is expected to cause a relatively early wine harvest across many northern hemisphere regions in 2015, from Piedmont and Rioja to Napa Valley in California and British Columbia in Canada.

Bordeaux’s wine bureau (CIVB) said the first red grapes should be harvested in mid-September. Around 6,500 seasonal pickers will begin arriving in the area over the next few weeks.

Grapes in many Bordeaux vineyards have finished their veraison – the color change process – and maturity was well advanced for Sauvignon Blanc, Colombard, Merlot and Cabernet Franc, according to the regional Chamber of Agriculture.

Later ripening Semillon and Cabernet Sauvignon were mid-way through color change.

The third and final sale from the cellar of Graham Lyons has been announced. Lyons is known internationally for his meticulous collecting and with particular focus on some of the rarest collections of Burgundy and Bordeaux in existence.

Entitled: “A London Gentleman’s Cellar: Historic Wines from the Collection of Graham Lyons Part III – The Final Offering” the sale is described by the auction house as “the highlight of the fall international auction season” and will be held at the Mandarin Oriental on 11 September.

Anais Marmonier, Zachys Asia marketing manager said, “The real star of the show is provenance. With few exceptions, every lot in the sale can be traced back via Mr. Lyons’ meticulous handwritten notes to either well-known European merchants, the nascent days of wine auctions with Mr. Michael Broadbent himself at the helm or, in many instances, the châteaux themselves.

“What is also interesting is that the Graham Lyons auction catalogue will stand as a benchmark for the fine wines of all of the great collection regions: Champagne, Bordeaux, Burgundy, the Rhône Valley, and even Germany, Spain, Hungary and as rare as Crimea.”

Particular auction highlights include: A jeroboam of 1961 Château Haut-Brion (estimated between HK$ 120,000-200,000) sourced directly from Château Haut Brion, three magnums of 1971 Romanée-Conti (estimated between HK$ 550,000-550,800) from Adnam’s on 19 October 1975 and 12 bottles of 1964 Barbaresco Santo Stefano di Neive Riserva Speciale from Giacosa (estimated HK$ 190,000-280,000) from Christie’s in London on 29 July 1982 and sourced directly from the Domaine.

Rated in the top five wines of the vintage by Robert Parker this May with 97-points, he labelled the Pape Clement an “iconic” example from the estate in what is quickly becoming apparently the most under-appreciated vintage from Bordeaux since the 2008s.

As Liv-ex has noted, its upgrade to 97-points from 92-95 and Parker’s fulsome praise did much to boost the wine when it became physical in April.

Having slumped to £400 ($627) a case at that point it rose in the space of just a month to a new high of £550 ($862) – up 38%.

Italy’s regions have leap-frogged Burgundy to become the second most widely traded fine wines on Liv-ex so far this year.

Bordeaux still accounts for the lion’s share of trade every month although it has seen its piece of the fine wine pie shrink from over 95% to 73% over the last five years.

Burgundy was the next biggest category, particularly in value thanks to the big bucks labels such as Domaine de la Romanée-Conti and Henri Jayer are able to command.

A close third was Italy – with a heavy slant towards the Super Tuscans – but as Burgundy’s price continues to reach its upper limit, the more affordable and liquid Italian wines have gained ground and so far this year have accounted for 7% of all activity to Burgundy’s 6.7%.

In 2011, Château Lafite Rothschild’s wines were riding high, the darlings of Chinese buyers and the auction market.

The futures price in London for the great 2010 vintage, released in July 2011, created shock waves. But it was priced at £12,000 a case (then $19,400) … and the wine hadn’t even been bottled yet. Almost immediately that price began to slip, and it’s been declining ever since. Last month, Liv-ex reported that a case of the 2010 had traded for £5,390 ($8,350), nearly 55 percent less than it cost four years ago.

The tale of 2010 Lafite shows what happens when a wine achieves cult status and then dips in fashion.

Lafite has always had a distinct mystique. In the now famous 1855 classification that ranked Bordeaux châteaux from fifth to first growths, it was named the first of the first growths. It’s Bordeaux’s most famous property, its wines the most elegant, with more finesse than power.

But that didn’t translate into astronomical prices until Chinese millionaires and billionaires caught the fever in about 2006, amassing huge stashes in their cellars.

A 12-bottle case of 2010 wine from Vieux Chateau Certan, an estate in the Pomerol region of Bordeaux, sold for 2,111 pounds ($3,300) on the Liv-ex wine market in the past week, the vintage’s highest level in 18 months.

The transaction came as investor and collector attention has switched from some of the Medoc first-growth labels in recent months in search of value elsewhere in Bordeaux or other regions. The sale is the most that the wine has garnered since two six-bottle cases went for 2,200 pounds in January 2014.

Wine buyers are still looking for signs of stability in the market after a turbulent seven years, sparked first by the 2008 financial crisis, then a bull market led by Asian demand for Chateau Lafite Rothschild, and more recently a selloff driven by China’s crackdown on lavish gift-giving. High prices for 2010 Bordeaux wine discouraged buyers in the U.S. and U.K. while lesser 2011 to 2013 vintages proved hard to sell.

Bordeaux’s “average monthly share is 74.2 percent so far this year compared to 79 percent in 2014,” Liv-ex’s latest monthly Cellar Watch report said of trading on the exchange. “Back in 2010 it took 95.2 percent.”

Six bottles of Chateau Lafite Rothschild 2010 wine sold for 2,550 pounds ($3,990) on the London-based Liv-ex wine market this week, taking the vintage to its lowest level this year as demand remained weak for top Bordeaux labels.

The sale, equal to 425 pounds a bottle, took the wine closer to the record low touched last December, when six bottles sold for 2,300 pounds, or 383 pounds a bottle, according to data on Liv-ex’s Cellar Watch website.

Lafite reached 12,500 pounds a case when it was first sold on Liv-ex in June 2011, tumbled below 8,000 pounds in September 2012 and hasn’t traded above 6,000 pounds since June last year. A two percent drop from current levels would take it below 5,000 pounds.

The 2010 vintage was given a 98-point rating by U.S. critic Robert Parker in February 2013, putting it among the top five of the past 15 years on his 100-point scale, according to the eRobertParker.com website.

Bordeaux’s share of trade on the Liv-ex online wine market has fallen to a monthly average of 74 percent so far this year from 79 percent in 2014, according to the London-based exchange’s latest Cellar Watch market report.

In 2010, as Chinese demand was driving a bull market in top wines from the region, the share was as high as 95 percent.

The wine market has come through a turbulent seven years, sparked by the 2008 financial crisis and then a selloff driven in part by China’s crackdown on lavish gift-giving. High prices for the critically acclaimed 2009 and 2010 Bordeaux vintages discouraged buyers in the U.S. and U.K., while lesser vintages between 2011 and 2013 proved hard to sell.

“After its trade share plummeted to an all time low of 65.5 percent in June, Bordeaux accounted for 75.2 percent in July,” Liv-ex said. “First growth share held steady,” with the five top left-bank wine estates representing 31 percent of Bordeaux activity and Chateau Mouton Rothschild trading the most.

Within Bordeaux, trading in the 2005 vintage dropped back in July after peaking in June amid a surge of investor interest, as U.S. critic Robert Parker published revised scores for those wines. Trading volume shifted more towards the 2010 vintage during July, according to the Cellar Watch report.

There is cause for celebration among the top wine producers in the prestigious Bordeaux region of France, a tract that many collectors, investors and oenophiles agree produces the finest, most exquisite and certainly the most desired wines among all its competitors. Why? China, a huge player in the all-important, tremendously influential Asian wine market, has, after many years of discussion (plus a few more laden with pressure from the Bordelais) agreed to grant Bordeaux the status of a registered Geographical Indication, or GI. The decision finally came after months of analysis by the Chinese General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Officials from the AQSIQ are expected to recognize 45 Bordeaux appellations within the next two months, inspiring a strong sigh of relief among the Bordelais.

To many, this may sound like a lot of legalese mumbo-jumbo with little to no importance to the consumer; however, if you are connected to a chateau in this globally revered Gallic region, or are involved in the sale of these fine wines to China, the decision carries exactly the kind of protection needed to prevent counterfeit or fraudulent products from being sold under the distinguished Bordeaux name.

So what exactly is Geographical Indication status? No, it has nothing to do with maps, apps or GPSs. The short answer is that it’s a sign used on a product from a specific geographic origin to define its unique region-of-origin-related qualities and / or reputation. (Think Roquefort Cheese or Nepalese Tea.) It also stops the sale of products which don’t meet the quality standards the region requires to be sold under its brand or moniker. While lots of items qualify for GI status, i.e. agricultural goods, foods, handcrafted wares and even industrial products, fine, investment grade wine has been particularly vulnerable without it. Forgery in the Chinese market has concerned the Bordelais for years – fraudulent, locally- made “Bordeaux” have easily infiltrated and tainted the market due to the lack of wine knowledge of the average customs inspector. This welcomed decision by China to grant Bordeaux GI status, a mission for the French since 2011, will hopefully give the region’s esteemed chateaux a legal leg to stand on should such activity continue.

Unlike Hong Kong, where tight regulations and a proactive anti-fraud initiative within the customs offices are alive and well, speculation suggests widespread fraud exists in the People’s Republic, particularly within Changli County, ironically nicknamed the Bordeaux of China. Clever and confusing labels such as “Château Margot” and “Chatreal Latour, Bordeaux” have run rampant, sparking monumental migraines among the Bordelais; these inferior fakes – which, surprisingly, couldn’t even be called counterfeit before the Bordeaux GI status designation was approved – compromised a respected reputation for quality wine production that has been carefully and painstakingly cultivated for centuries. As one would expect, it was only a matter of time before Bordeaux suffered a financial hit as well.

Aside from the win for the Bordelais, the decision to grant Bordeaux GI status will also benefit China-based wine investors and consumers. Before the designation, under-informed buyers ran the risk of being taken for the proverbial ride, which could easily translate into poor investments and major financial losses. Now, earnest buyers and investors can purchase Bordeaux with an elevated sense of security, knowing that what’s on the label is also in the bottle.

In tandem with these developments, it’s important to note that China is kicking up its own wine production capabilities. The Xinjian region is especially prolific, and may soon be lobbying for its own registered appellations. Fasten your seatbelts, as an East vs. West vinicultural showdown may very well be on the horizon.

In the build-up to and immediately after Robert Parker’s 10-year retrospective, the 2005s were all the rage, prices rose, trade went up but, like cherry blossom, the attention was brief.

After a week those highly-rated wines had traded as much as they were going to and those tipped for success that fell short quickly saw interest drop away as well. Over the course of the month when it was in the eye of the storm trade in the vintage dropped from a high of 23.4% share of trade to just 9.2%.

Liv-ex reports that trade in the 2009s has remained steady but the space left by declining interest in the 2005s has given the 2010s room to manoeuvre.

In July the vintage took 18.2% of the share of the trade in Bordeaux with Pontet-Canet and La Mission Haut-Brion in particular seeing “high activity”. The five most traded 2010s last month were: Pontet-Canet, Duhart Milon, Palmer, La Mission and Margaux.

The 2010s represented a new peak for Bordeaux release prices when they came out in 2011 but they appeared in a market that was already beginning to falter and prices immediately suffered in the secondary market.

Prices have been declining steadily for the last four years – as has the wider market – but the signs are now that most of the wines have found their bottom.

Over half of the 49 Bordeaux wines given a “perfect” 100-point score by Robert Parker since 2000 are currently trading below £5,000 a case ($7811).

A stark reminder of far off its peak the Bordeaux market currently is, 29 100-point wines from both banks of the Gironde are currently below £5,000 p/cs of 12, in fact all are below £4,500 p/cs and 12 of them below £2,000 p/cs.

As compiled by Liv-ex, the list has slightly more Right Bank wines on it than Left Banks with 17 to the latter’s 12. However all of the vintages are 2005, 2009 and 2010 – with the exception of the 2000 vintages from La Mission Haut-Brion and Pavie.

This chimes well with Liv-ex’s previous reports that several of La Mission’s vintages are currently at a level well below what their scores suggest they should or could be and that Pavie – which like La Mission has three wines on the list – is more of a “second growth” price-wise and not quite on the level of fellow Saint Emilion cru classé “A” Angélus (which has just one wine on the list, the 2005).

Bellevue Mondotte, Beauséjour Duffau, Ponet-Canet and Montrose all have two wines on the list, usually their 2009/2010 vintages but also the 2005/2009 in the case of Bellevue Mondotte.

As to why the wines on the list are all from just three vintages the answer is simple.

Westgarth Wines is not registered as an investment adviser and not regulated by the Security and Exchange Commission or any state securities regulatory agency. Westgarth Wines does not offer financial advice on any asset other than wine. Investing in wine involves risk as prices fluctuate. We advise you to seek independent financial advice before investing in wine.